TVA Group reports increased adjusted operating income[1] for the second straight quarter

MONTREAL, Feb. 26, 2016 /CNW Telbec/ - TVA Group Inc. ("TVA Group" or the "Corporation") today announced that it recorded adjusted operating income1 in the amount of $16.8 million in the fourth quarter of fiscal 2015, compared with $6.8 million in the same quarter of 2014.

However, the Corporation declared a net loss attributable to shareholders of $1.5 million or a loss of $0.03 per share for the quarter, compared with a net loss attributable to shareholders of $4.4 million or a loss of $0.19 per share in the same quarter of 2014.

Fourth quarter operating highlights:

  • Consolidated adjusted operating income1: $16,846,000, up $10,032,000 (147%) from the same quarter of 2014.
  • Adjusted operating income1 in the Broadcasting & Production segment: $14,013,000, up $8,940,000 (176%) due mainly to the following factors:
    • improved adjusted operating results1 at "TVA Sports," essentially due to a 19% increase in advertising revenues and a 13% increase in subscription revenues;
    • 80% increase in adjusted operating income1 at the other specialty services, mainly reflecting higher subscription revenues;
    • increase in adjusted operating income1 at TVA Network, mainly as a result of the operating cost reduction plan.
  • Adjusted operating income1 in the Magazines segment: $1,853,000, up $112,000 (6%) mainly because of the addition of the adjusted operating results of the magazines acquired from Transcontinental, which was partially offset by the impact of the decrease in the segment's operating revenues, excluding the acquired magazines.
  • Adjusted operating income1 in the Film Production & Audiovisual Services segment ("MELS"): $980,000.

"We are pleased to be posting growth in adjusted operating income1 for a second quarter in a row," commented Julie Tremblay, President and Chief Executive Officer of the Corporation. "The increase is due to our revenue diversification strategy and our marketing efforts in support of our brands and content. The Broadcasting & Production segment improved its financial performance significantly, particularly at its news and entertainment specialty services, which increased their combined adjusted operating income1 by 80%, and its "TVA Sports" specialty service, which improved its adjusted operating results by 49%. TVA Network held its 22.5% market share, while our two main rivals saw market share declines. The combined market share of our specialty services increased by 0.3 points to 10%."

"The Magazines segment slightly increased its profitability, as measured by adjusted operating income,1 despite considerable pressure on advertising revenues. To maintain our market position and focus our resources on our strong brands, we announced on November 18, 2015 the discontinuation of six French-language titles. This move will enable the Corporation's flagship brands to increase their reach. Despite the closures we maintain a strong presence in every niche," added Ms Julie Tremblay.

"We are also very pleased with the response from local and foreign producers of films and television series, who are making extensive use of MELS' soundstage facilities and equipment, as well as its postproduction and special effects services. In line with our commitment to offering them outstanding service, we announced the appointment of Michel Trudel to the position of President of MELS. His appointment will help carry the company into a new phase of expansion at home and internationally," concluded the President.

2015 financial year results

The Corporation's consolidated adjusted operating income1 for the financial year ended December 31, 2015 amounted to $47,390,000 compared with $29,426,000 for the previous year, a 61% increase. The Broadcasting & Production segment grew its adjusted operating income1 by 30% while the Magazines segment posted a 20% decrease. The addition of the operations of the Film Production & Audiovisual Services segment, created following the acquisition of assets now operated by MELS on December 30, 2014, made a significant contribution to the growth, generating $14,062,000 in adjusted operating income1 in 2015. The improvement in the Broadcasting & Production segment's adjusted operating income1 was due to the increase in TVA Network's adjusted operating income1, which was driven by reductions in content costs and the operating cost reduction plan introduced in the second quarter of 2015, as well as the 48% increase in the combined adjusted operating income1 of specialty services (other than "TVA Sports") resulting from higher subscription revenues.

Consolidated operating revenues amounted to $589,890,000 in fiscal 2015, compared with $439,340,000 in the previous year, a 34% increase. The Corporation's net loss attributable to shareholders was $55,226,000 or a loss of $1.42 per share in 2015, compared with a net loss attributable to shareholders of $41,088,000 or a loss of $1.73 per share in 2014.

Also, in the third quarter of 2015, the Corporation completed the annual update of its three-year strategic plan, including the plan for its Broadcasting & Production segment. The Corporation recognized a $60,107,000 non-cash impairment charge with respect to a broadcasting licence, including $30,054,000 without any tax consequences ($32,462,000 in 2014, including $16,231,000 without any tax consequences). In 2014, an $8,538,000 non-cash goodwill impairment charge, without any tax consequences, was also recognized.

___________________________
1 See definition of adjusted operating income (loss) below.

Definition

Adjusted operating income (loss) ("Adjusted operating results")

In its analysis of operating results, the Corporation defines adjusted operating income (loss) as net income (loss) before depreciation of property, plant and equipment, amortization of intangible assets, financial expenses, operational restructuring costs, impairment of assets and others, income taxes and share of loss (income) of associated corporations. Adjusted operating income (loss) as defined above is not a measure of results that is consistent with International Financial Reporting Standards ("IFRS"). Neither is it intended to be regarded as an alternative to other financial performance measures or to the statement of cash flows as a measure of liquidity. This measure should not be considered in isolation or as a substitute for other performance measures prepared in accordance with IFRS. This measure is used by management and the Board of Directors to evaluate the Corporation's consolidated results and the results of its segments. This measure eliminates the significant level of impairment, depreciation and amortization of tangible and intangible assets and is unaffected by the capital structure or investment activities of the Corporation and its segments. Adjusted operating income (loss) is also relevant because it is a significant component of the Corporation's annual incentive compensation programs. The Corporation's definition of adjusted operating income (loss) may not be identical to similarly titled measures reported by other companies.

Forward-looking information disclaimer

The statements in this news release that are not historical facts may be forward-looking statements and are subject to important known and unknown risks, uncertainties and assumptions which could cause the Corporation's actual results for future periods to differ materially from those set forth in the forward-looking statements. Forward-looking statements generally can be identified by the use of the conditional, the use of forward-looking terminology such as "propose," "will," "expect," "may," "anticipate," "intend," "estimate," "plan," "foresee," "believe" or the negative of these terms or variations of them or similar terminology. Factors that may cause actual results to differ from current expectations include seasonality, operational risks (including pricing actions by competitors), programming, content and production cost risks, credit risk, government regulation risks, government assistance risks, changes in economic conditions, fragmentation of the media landscape, and labour relation risks. Investors and others are cautioned that the foregoing list of factors that may affect future results is not exhaustive and that undue reliance should not be placed on any forward-looking statements. For more information on the risks, uncertainties and assumptions that could cause the Corporation's actual results to differ from current expectations please refer to the Corporation's public filings available at www.sedar.com and http://groupetva.ca including, in particular, the "Risks and Uncertainties" section of the Corporation's annual Management's Discussion and Analysis for the year ended December 31, 2015.

The forward-looking statements in this news release reflect the Corporation's expectations as of February 26, 2016, and are subject to change after this date. The Corporation expressly disclaims any obligation or intention to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by the applicable securities laws.

TVA Group

TVA Group Inc., a subsidiary of Quebecor Media Inc., is an integrated communications company engaged in the broadcasting, film and television production, and magazine publishing industries. TVA Group Inc. is North America's largest broadcaster of French-language entertainment, information and public affairs programming, largest publisher of French-language magazines, and one of the largest private-sector producers of French-language content. The Corporation's Class B shares are listed on the Toronto Stock Exchange under the ticker symbol TVA.B. 

The audited consolidated financial statements, with notes, and the annual Management's Discussion and Analysis, can be consulted on the Corporation's website at http://groupetva.ca.

 

TVA GROUP INC.
Consolidated statements of (loss) income


(unaudited)
(in thousands of Canadian dollars, except per-share amounts)


Three-month periods

ended December 31

Years ended

December 31



2015


2014


2015


2014










Revenues

$

165,429

$

129,794

$

589,890

$

439,340










Purchases of goods and services


109,634


92,063


383,156


283,571

Employee costs


38,949


30,917


159,344


126,343

Depreciation of property, plant and equipment and amortization of intangible assets


12,757


5,533


33,515


22,104

Financial expenses


290


1,058


4,104


4,231

Operational restructuring costs, impairment of assets and others


3,436


3,485


6,315


3,594

Impairment of a licence and of goodwill




60,107


41,000

Income (loss) before tax expense (recovery) and share of loss of associated corporations


363


(3,262)


(56,651)


(41,503)










Tax expense (recovery)


265


(2,058)


(7,818)


(8,753)

Share of loss of associated corporations


1,575


3,214


6,134


8,338

Net loss

$

(1,477)

$

(4,418)

$

(54,967)

$

(41,088)










Net (loss) income attributable to:









Shareholders

$

(1,472)

$

(4,418)

$

(55,226)

$

(41,088)

Non-controlling interest


(5)



259




















Basic and diluted loss per share attributable to shareholders

$

(0.03)

$

(0.19)

$

(1.42)

$

(1.73)

 


TVA GROUP INC.
Consolidated statements of comprehensive (loss) income


(unaudited)
(in thousands of Canadian dollars)


Three-month periods

ended December 31

Years ended

December 31



2015


2014


2015


2014










Net loss

$

(1,477)

$

(4,418)

$

(54,967)

$

(41,088)










Other comprehensive items that may be reclassified to income:








Cash flow hedge:











Gain (loss) on valuation of derivative financial instruments


57



(462)




Deferred income taxes


(16)



124


Other comprehensive items that will not be reclassified to income:








Defined benefit plans:











Re-measurement loss


(3,446)


(11,993)


(3,446)


(11,993)



Deferred income taxes


928


3,227


928


3,227












(2,477)


(8,766)


(2,856)


(8,766)










Comprehensive loss

$

(3,954)

$

(13,184)

$

(57,823)

$

(49,854)










Comprehensive (loss) income attributable to:









Shareholders

$

(3,949)

$

(13,184)

$

(58,082)

$

(49,854)

Non-controlling interest


(5)



259


 

TVA GROUP INC.
Consolidated statements of equity


(unaudited)
(in thousands of Canadian dollars)


Equity attributable to shareholders

Equity
attributable
to non-
controlling
interest

Total
equity


Capital
stock

Contributed
surplus

Retained
earnings

Accumula-
ted other
comprehen-
sive income
(loss)














Balance as at December 31, 2013

$

98,647

$

581

$

203,683

$

5,148

$

$

308,059

Net loss




(41,088)




(41,088)

Other comprehensive loss





(8,766)



(8,766)














Balance as at December 31, 2014


98,647


581


162,595


(3,618)



258,205

Business acquisitions






417


417

Net (loss) income




(55,226)



259


(54,967)

Issuance of share capital, net of transaction costs


108,633






108,633

Other comprehensive loss





(2,856)



(2,856)

Balance as at December 31, 2015

$

207,280

$

581

$

107,369

$

(6,474)

$

676

$

309,432

 

TVA GROUP INC.
Consolidated balance sheets


(unaudited)
(in thousands of Canadian dollars)


December 31,
2015

December 31,
2014






Assets










Current assets






Cash

$

11,996

$


Accounts receivable


150,930


136,811


Income taxes


6,787


5,256


Programs, broadcast rights and inventories


79,495


74,765


Prepaid expenses


4,064


3,734



253,272


220,566

Non-current assets






Broadcast rights


36,321


31,989


Investments


12,594


12,111


Property, plant and equipment


208,103


201,429


Licences and other intangible assets


39,770


83,647


Goodwill


77,985


48,266


Defined benefit plan asset



2,964


Deferred income taxes


7,069


1,060



381,842


381,466

Total assets

$

635,114

$

602,032







Liabilities and equity










Current liabilities






Bank overdraft

$

$

4,486


Accounts payable and accrued liabilities


112,914


88,746


Income taxes


1,769


777


Broadcast rights payable


88,867


45,660


Provisions


7,107


4,331


Deferred revenues


28,148


8,690


Credit facility from parent corporation



100,000


Short-term debt


4,219


938



243,024


253,628

Non-current liabilities






Long-term debt


68,812


72,757


Other liabilities


10,974


9,967


Deferred income taxes


2,872


7,475



82,658


90,199

Equity






Capital stock


207,280


98,647


Contributed surplus


581


581


Retained earnings


107,369


162,595


Accumulated other comprehensive loss


(6,474)


(3,618)


Equity attributable to shareholders


308,756


258,205


Non-controlling interest


676




309,432


258,205

Total liabilities and equity

$

635,114

$

602,032

 

TVA GROUP INC.
Consolidated statements of cash flows


(unaudited)
(in thousands of Canadian dollars)


Three-month periods

ended December 31

Years ended

December 31



2015


2014


2015


2014










Cash flows related to operating activities










Net loss

$

(1,477)

$

(4,418)

$

(54,967)

$

(41,088)


Adjustments for:











Depreciation and amortization


12,826


5,604


33,829


22,326



Impairment of assets



832



832



Impairment of a licence and of goodwill




60,107


41,000



Share of loss of associated corporations


1,575


3,214


6,134


8,338



Deferred income taxes


(18)


(5,670)


(8,663)


(9,838)



Loss on valuation of derivative financial instruments


2



24


Cash flows provided (used) by current operations


12,908


(438)


36,464


21,570

Net change in non-cash balances related to operating activities


(4,449)


9,916


58,830


15,116

Cash flows provided by operating activities


8,459


9,478


95,294


36,686










Cash flows related to investing activities










Net business acquisitions


(786)


(116,115)


(57,147)


(116,616)


Additions to property, plant and equipment


(6,308)


(4,244)


(23,900)


(22,158)


Additions to intangible assets


(1,061)


(806)


(2,642)


(2,489)


Net change in investments



(1,911)


(2,620)


(6,459)

Cash flows used in investing activities


(8,155)


(123,076)


(86,309)


(147,722)










Cash flows related to financing activities










Change in bank overdraft



4,486


(4,486)


4,486


(Repayment) increase of credit facility from parent corporation



100,000


(100,000)


100,000


Repayment of a term loan



(75,000)



(75,000)


(Repayment) increase of long-term debt


(1,152)


74,737


(940)


74,737


Issuance of share capital, net of transaction costs




108,633



Financing costs



(904)



(904)


Repayment of derivative financial instruments


(51)



(196)


Cash flows (used) provided by financing activities


(1,203)


103,319


3,011


103,319










Net change in cash


(899)


(10,279)


11,996


(7,717)

Cash at beginning of period


12,895


10,279



7,717

Cash at end of period

$

11,996

$

$

11,966

$










Interests and taxes reflected as operating activities










Interests paid

$

800

$

2,117

$

3,975

$

4,169


Income taxes (cashed) paid (net of payments or of refunds)


(731)


1,486


1,374


7,266

 

TVA GROUP INC.
Segmented information

(unaudited)
(in thousands of Canadian dollars)

At the beginning of 2015, the Corporation revised its business segments to better reflect changes in its operations and management structure following the acquisition on December 30, 2014 of substantially all of the assets of A.R. Global Vision Ltd., now operated by MELS. Accordingly, the new Film Production & Audiovisual Services segment was created.

In addition, since April 12, 2015, following the transaction with Transcontinental Inc., the operations of the acquired magazines have been included in the Magazines segment's results, while custom publishing operations have been included in the Broadcasting & Production segment's results.

Then, the Corporation's operations consist of the following segments:

  • The Broadcasting & Production segment, which includes the operations of TVA Network (including the subsidiary and divisions TVA Productions Inc., TVA Nouvelles and TVA Interactif), specialty services, the marketing of digital products associated with the various televisual brands, the commercial production, dubbing, custom publishing and premedia services of TVA Accès inc., and distribution of audiovisual products by the TVA Films division.
  • The Magazines segment, which through its subsidiaries, notably TVA Publications inc. and Les Publications Charron & Cie inc., publishes French‑ and English‑language magazines in various fields such as the arts, entertainment, television, fashion, sports and decoration, and markets digital products associated with the various magazine brands.
  • The Film Production & Audiovisual Services segment, which since December 30, 2014 has included the soundstage and equipment leasing, postproduction and visual effects services provided by MELS.

 





Three-month periods

ended December 31

Years ended

December 31



2015


2014


2015


2014










Revenues










Broadcasting & Production

$

122,962

$

116,173

$

428,526

$

380,178


Magazines


32,477


15,275


106,457


62,614


Film Production & Audiovisual Services


11,754



60,120



Intersegment items


(1,764)


(1,654)


(5,213)


(3,452)



165,429


129,794


589,890


439,340

Adjusted operating income(1)










Broadcasting & Production


14,013


5,073


25,592


19,728


Magazines


1,853


1,741


7,736


9,698


Film Production & Audiovisual Services


980



14,062




16,846


6,814


47,390


29,426

Depreciation of property, plant and equipment and amortization of intangible assets


12,757


5,533


33,515


22,104

Financial expenses


290


1,058


4,104


4,231

Operational restructuring costs, impairment of assets and others


3,436


3,485


6,315


3,594

Impairment of a licence and of goodwill




60,107


41,000

Income (loss) before tax expense (recovery) and share of loss of associated corporations

$

363

$

(3,262)

$

(56,651)

$

(41,503)

 

The above-noted intersegment items represent the elimination of normal course business transactions between the Corporation's business segments regarding revenues.

 

(1)

The Chief Executive Officer uses adjusted operating income (loss) as a measure of financial performance for assessing the performance of each of the Corporation's segments. Adjusted operating income (loss) is defined as net income (loss) before depreciation of property, plant and equipment and amortization of intangible assets, financial expenses, operational restructuring costs, impairment of assets and others, income taxes and share of loss (income) of associated corporations. Adjusted operating income (loss) as defined above is not a measure of results that is consistent with IFRS.

 

SOURCE TVA Group

For further information: Denis Rozon, CPA, CA, Vice President and Chief Financial Officer, (514) 598-2808

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